Your Complete Guide to Using a VA Mortgage Affordability Calculator

In general, buying a home requires a lot of cash, which can make homeownership hard to achieve for many. 

However, for those qualified to use the VA loans because of their military service, it’s possible to own a home with little or no cash as a down payment through the VA program. 

VA loans were created in 1944 to thank the returnees from the world war and help them acquire new houses. These loans are sponsored by the US Department of Veteran Affairs and can be used to build, refinance, buy, or renovate an old house or condo. 

The VA loan consists of relatively easy rules to fulfill before qualifying. But we’ll discuss the costs that are involved, affordability, and how to use a VA mortgage loan calculator.

Related reading: Your Step-By-Step Guide Buying a Home in 2023

What are the requirements for a VA loan?

Before figuring out if you can afford a VA loan, let’s look at the requirements to qualify. 

1. You must be an eligible veteran or service member 

Current service members in the Army, Navy, Air Force, Marine Corps, National Guard, or reserve corps must have served for at least 90 consecutive days. The minimum time served to qualify for veterans will depend on the time period they served. Confirm your minimum required service time on the VA website. 

U.S. Army veterans who were honorably discharged and met the minimum service requirements of 90 consecutive days during an active wartime period or at least 181 consecutive days of active service during peacetime can also qualify. 

Surviving spouses of service members can qualify for a VA loan if their partner passes away during active service or becomes incapacitated due to a service-related disability. 

2. You must meet the minimum financial requirements

Although the VA does not require a specific credit score minimum, it’s necessary to show the lender you can repay your mortgage when due. 

A borrower’s credit score (usually 620 or higher) and debt-to-income ratio (41% or less) are the biggest factors in loan approval from the lender. Since the VA will back a portion of the loan in the case of default, lenders can afford to be more lenient in their approvals. 

Private VA-approved lenders may have their own additional requirements. Confirm everything needed with the lender before you begin the process. 

3. You must meet the minimum property and occupancy requirements

Funding from a VA loan can only be used in purchasing or renovating a house that will serve as your primary address and place of residence. It cannot be used for investment properties or buying a vacation home. 

4. You must have the proper documentation

After all the above requirements are met, an applicant must provide at least 1-2 years of consistent employment history to their lender. They must also apply and receive their VA Certificate of Eligibility (COE) before they can begin the loan process. 

Related reading: I’ve served my country. How do I use my VA benefits for a home? 

How to use a VA loan affordability calculator

1. Income: Enter your annual income before taxes. If you’re self-employed, calculate the average of your income over the past two years. This figure gives the calculator an idea of your overall earning capacity.
2. Debt: Input the total monthly amount you pay for debts such as car payments, credit card minimums, or student loans. This helps the calculator assess your existing financial obligations.
3. Down payment: Enter the down payment amount you plan to make. This is the initial payment you will contribute towards the home purchase. If you intend to put down zero, you can leave this field blank or enter “0”.
4. Credit score: Specify your credit score based on the provided ranges which are excellent (720+), good (660-719), fair (620-659), or poor (below 620). Your credit score plays a role in determining the interest rate you may qualify for.
5. Interest rate: Enter the estimated interest rate for the VA loan. The default rate provided is 7.07% APR, but it’s important to note that your actual rate may differ. Consult with a VA-approved lender to get a more accurate estimate based on your specific circumstances.
6. Loan term: Select the desired loan term from the options provided—30 years or 15 years. The loan term affects the duration of your mortgage and can impact your monthly payments.
7. Military branch: Include any additional options related to military service. Choose the appropriate military type based on your service status: regular military, reserves, national guard, or surviving spouse. 
8. Property tax rate: Property taxes are generally estimated to be around 1.2% of the home’s value, but they can vary depending on your location. Consult with a loan officer or research local property tax rates to get a more accurate estimate.
9. Annual homeowners’ insurance rate: Typically, homeowners insurance is estimated to be around 0.35% of the home’s value. However, this rate can vary based on the insurance provider and other factors. Consult with insurance providers or research average rates in your area to get a more precise figure.
10. Review: Review the results provided by the calculator. It will estimate the loan amount you may qualify for and provide details on the estimated monthly payment. This information gives you an idea of the affordability range for your home purchase.
11. Adjust as needed: Consider adjusting the inputs to explore different loan scenarios. You can modify variables such as the down payment amount, credit score, loan term, interest rate, property tax rate, or homeowners insurance rate. By adjusting these variables, you can assess how changes in each factor affect your affordability and monthly payment.
12. Make a plan: Once you have an idea of how much your VA mortgage will cost, you can make an action plan to improve your finances or go straight to your preferred lender to start the process. 

Related reading: 5 VA Loan Benefits When Buying a Home

Apply for a VA loan with Homefinity

Remember that while the VA loan affordability calculator is a useful tool, it’s only an estimate. 

It’s always recommended to consult with a mortgage professional or VA-approved lender such as Homefinity for a more accurate assessment and to explore your loan options further. 

Our team can provide personalized advice based on your specific financial situation and goals. You’ve served your country, so let us serve you by helping you find the ideal home that perfectly matches your needs and goals.Contact Homefinity today and get a great rate quote personalized just for you.

*Offer subject to Military eligibility requirements.